Music Licensing Paying the Piper

You've arranged for the linens, chairs and tables, floral, food-everything is within budget. But have you also budgeted for the cost of using copyrighted music at your event? Although both event organizers and their clients are often unaware of it, a public performance of copyrighted music is subject to a licensing fee.

The money goes to the American Society of Composers, Authors and Publishers (ASCAP); Broadcast Music Inc. (BMI); and SESAC (once known as the Society for European Stage Authors and Composers)-the three major performing rights organizations in the United States. These licensing organizations are not profit-making ventures-they act as clearinghouses for the fees, passing the bulk of them on to the songwriters, composers and publishers.

According to Jonathan Howe, a Chicago-based lawyer who specializes in hospitality, events and trade shows, any public event that incorporates music-including corporate galas, festivals, public performances, fund-raisers, conventions and trade shows-is subject to licensing. Hotels that play music in public areas-in lounges, lobbies, restaurants, discos and banquet halls-also need to pay licensing fees. Weddings and other private events are exempt.

IT'S THE LAW Under the United States Copyright Law (Title 17, United States Code), the proprietor of any establishment playing music-whether the music is live or recorded (e.g., radios, tapes, CDs)-must obtain authorization to do so.

Although technically possible to play the music covered by only one of the performing rights organizations, in practice it's impossible. So to stay within the law, corporations and hotels will wind up paying an annual fee to each of the three different performing rights organizations.

THE CLIENT PAYS If you are an event planner, your client is responsible for paying the music licensing fees. Hotels, on the other hand, are responsible for on-premise events that use copyrighted music, as well as for music played in their public areas.

Comcor Event and Meeting Productions, based in Fort Lauder-dale, Fla., includes the following clause in its client agreements:

"Client acknowledges that some of its events may require the use of live or recorded music protected by U.S. copyright laws. Client shall be responsible for obtaining the proper licenses from any or all of ASCAP, BMI or SESAC. If requested by Client, Comcor will assist Client in obtaining the appropriate license(s) for Client's functions."

"Ninety percent of our clients say, 'I've never heard of this before,' when they read this," says Comcor president Mona Meretsky, CSEP.

"Comcor's statement is very appropriate," says Howe. "Special event planners should alert clients they may need a license."

But not everyone does. Paul Creighton, senior executive vice president of Orlando, Fla.-based entertainment producer T. Skorman Productions, says, "I don't bring it up with clients unless they do. But I do tell people: 'When one of the performing rights organizations comes to you, you can negotiate, but you cannot ignore them-the law is clearly on their side. If you tell them you won't pay, they will sue-and they will win.'"

FEES VARY Factors such as how music is used and the size of the company, convention or hotel determine the licensing fees. Corporations can buy a one-time, per-event license or a monthly or yearly blanket license that covers all music used during that time.

At Nashville, Tenn.-based BMI, the price for an annual license for a corporation is based on the number of employees, starting with 57 cents per person for the first 250 employees, according to Tom Annastas, BMI vice president of general licensing.

For individual events, New York City-based ASCAP charges a $70 minimum fee, or 6 cents per employee, for recorded music. "With live music, it depends on the number of people," says Laurie Hughes, director of business affairs in ASCAP's Nashville office. "For fewer than 250, for example, it's $35."

Hotels generally pay blanket fees. For SESAC, the annual charge is $300 to $500 for a hotel with about 100 rooms, meeting spaces and a small lounge. For a big casino hotel in Las Vegas, for example, the bill can run to several thousand dollars a year, according to Bill Lee, director of licensing operations at Nashville-based SESAC.

For conventions and the like, BMI charges 5 cents per attendee, whether it is a live or recorded performance, with a cap not to exceed the total registration for the event.

This fall, BMI expanded its music licensing agreement for meetings, conventions, trade shows and expositions, allowing management companies to cover fees for their clients.

Notes Annastas, "Having a management company handle music licensing will expedite administration for many organizations." The agreement was refined in talks with the American Society of Association Executives, Meeting Planners International, the Professional Con-vention Managers Association and the Religious Conference Manage-ment Association.

PACKAGE PLANS An alternative is to sign up with a music service provider such as Muzak or AEI Music, both based in Seattle. These providers supply musical programming to clients such as restaurants and hotels for a fee, which includes ASCAP, BMI and SESAC charges. But, as Chuck Walker, director of licensing for Muzak, points out, "in most cases, we don't cover functions where an admission is charged or a commercial message is relayed."

According to Barry Knittel, president of AEI Music Markets World-wide, its services often run under $100 per month, depending on the number of channels in the hotel.

If you use a music provider such as AEI, "don't be coerced to double-pay" by ASCAP, BMI or SESAC, warns Dante Alexander, vice president of food and beverage for Starwood Hotels & Resorts, headquartered in White Plains, N.Y.

Can you use music without paying the fee? All three organizations will try to find out if you are. They show up at hotels, restaurants and other establishments, listening for copyrighted material. They also check establishments' Web sites for events and venues that use music.

"We send violators a friendly letter, followed by a phone call," explains ASCAP's Hughes. "Suing is a last resort."

Jonathan Howe will discuss copyright infringement and other legal issues in his seminar "Special Risks for Special Events: Legal Tips to Manage Risk" at The Special Event 2000. For more information, call 800/288-8606; or visit The Special Event Web site at: www.specialevents.com/tse2000